Regarding the bigger picture, aside from energy, inflation, banking, etc., this analysis from 2/27 seeems to sum things up pretty well.
dismal.com
<<Analysis
Consumer confidence holds the key in the ability of the economy to avoid a recession. As it stands now, consumers are losing faith in the economy rapidly. The Conference Board’s composite index is in freefall, shedding 36 points since September. The plunge in confidence is driven primarily by trepidation about the future. Expectations have now fallen to where they were in 1993, just when the U.S. economy was emerging from the stagnation following the last recession. The daily litany of layoff announcements, the dot com meltdown and the weakening stock market are weighing heavily on consumers.
However, it should be pointed out that the assessment of present conditions still remains very high. Having increased by nine-fold since the nadir of 1992, the present conditions component is now 12% off its peak. The unemployment rate is still quite low in historical perspective and the jobs plentiful component, though declining, is still where it was at the beginning of 1999. Moreover, many companies are still hiring vigorously, although the press is dwelling on the layoff announcements, which in many cases are misleading.
Regionally, confidence has fallen most sharply in the industrial Midwest, which has been affected by large restructuring moves by the Big Three auto makers, a bevy of cost-cutting measures being implemented by heavy truck and industrial equipment manufacturers, auto suppliers and electronics companies, and the bankruptcies of steel companies. Confidence, particularly the assessment of present conditions, has fallen least in the oil patch and mountain states.
The big question now is whether the economy is in recession now (definite data will not be available for several months)and whether adequate fiscal and monetary remedies can be deployed to prevent further deterioration in the economy and/or to effect a rapid turnaround. During the past three decades, there has never been a period where the Conference Board’s measure of consumer confidence has fallen as much as it has during the past few months, which was not followed by a recession. Consumer confidence is driven as much by real world events as by psychology. Consumers need to be reassured that the economy is not in freefall; if that is not done, a recession could be self-fulfilling.
In any event, there is little doubt that the Federal Reserve will work assiduously to keep the economy from unraveling by lowering interest further either at the next Fed meeting at the end of March or sooner. >>
"Consumers need to be reassured that the economy is not in freefall." As inarticulate as he seems to be, where is Dubya when you need him? Can you say "volatility?" Ed |
